Distortions in new Walker ad, part 2: the budget and taxes

In my previous post on Gov. Scott Walker's newest ad asking you to help him "oppose" the recall, I took a look at job claims the Republican executive made. Namely, I took issue with Walker pretending that he was responsible for any job gains made in 2011 (because those gains occurred under a different governor's budget) and casting blame on the previous administration for losing 150,000 jobs in the state when it was due more to a global economic recession.

It's clear from that assessment that Walker isn't being honest with the people of this state within his latest ad campaign. Sadly, his dishonesty goes even further, into claims that he balanced the budget and didn't raise taxes. In fact, the first claim is murky, at best, and blatantly false at worst; the second claim is an outright lie.

The Budget

In his latest ad, Walker makes a claim that he resolved the budget problems the state saw when he took office:

We kept our promise to balance the budget...eliminating a $3.6 billion deficit.

Walker contends that his actions as governor eliminated the deficit. But there are many problems with his statement, beginning with how big the deficit was in the first place.

When Walker took office, the deficit was indeed projected at $3.6 billion. But in May of 2011, it was discovered that the state's estimates had changed due to increased revenue projections from the Doyle budget the year before. About $600 million dollars was discovered that had previously been thought of as part of that deficit. So the real deficit was $3.0 billion.

With $3 billion to make disappear -- it's a Constitutional requirement in Wisconsin to balance every budget -- Walker had a huge task ahead of him. How did he handle it? In a very impractical way: he gave tremendous tax breaks to the wealthy and corporations in the state, even as two-thirds of all businesses didn't even pay taxes at all. These tax breaks cost the state $2.3 billion in revenue.

Not only did Walker have to make up for the budget deficit that proceeded him -- he also had to trim the budget to make up for his own tax cuts, which increased the size of the budget hole by 76 percent.

In 2010, Walker had campaigned on balancing the budget using Generally Accepted Accounting Principles. A little background here is important: Budget items that push deficits down the road are considered deficits under GAAP. Think of it like using a credit card. Under GAAP, the money you spend on the card would be considered part of your household budget (rather than when you got the bill a month from now).

So Walker had made using those principles a staple of his candidacy. But when it came to balancing the budget, Walker DIDN'T use GAAP, breaking a campaign promise, and keeping the state in debt under those conditions. How far in debt?

$3 billion, the exact amount he started out with.

And this is somehow a victory for Walker?

Taxes

Walker also made another hefty campaign promise -- to balance the budget without raising anyone's taxes. We've already seen that Walker failed to really balance the budget, at least according to his own standards, but did he at least keep the no-tax pledge intact?

As pointed out above, Gov. Walker gave billions of dollars in tax breaks to the rich and to corporations. However, when it came to the opposite end of the economic spectrum -- that is, the working poor -- Walker didn't take the same tone. In fact, the governor diminished how much of the Earned Income Tax Credit these workers could claim, meaning their total taxes would go up this year.

In other words, Walker raised taxes on the working poor. A single mother earning minimum wage could see her taxes go up by as much as two percent of her income this year due to the "reforms" in the tax code within Walker's budget.

When confronted with this fact, the Walker administration tried to say that a reduction in a tax credit wasn't a tax increase, but rather a reduction in spending. But try telling that to the people who have to pay higher taxes this year. A reduction in a credit is an increase because, in the end, those individuals will pay higher taxes. By definitional standards alone, that's a tax increase.

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On two more issues within Walker's latest ad, the governor has misled the public. He failed to balance his budget by his own standards that he campaigned on. He raised taxes on the working poor and then minced words when he was caught. And the governor has the audacity to place a new ad claiming he's a positive force for Wisconsin's values?

These issues, as well as the issue of job growth (decline) while he's been office, demonstrate without question that Walker has failed our state. Is it any wonder he's chosen to lie and distort in his campaign ads? He can't run on his record -- so what choice but to misinform the public does he really have?